The CRTC has recently introduced a new policy which affects what Canadian programs we will see on TV. The policy is based on some very questionable sources and often just pure speculation about what Canadians want. Perhaps the Commission has been paying too much attention to pundits and arcane, one-off surveys and too little to average Canadians.
The Commission did put a "survey" questionnaire on its web site but only 13,000 people completed it and most were probably industry folks who were strongly encouraged by their unions and guilds to answer the questions about the future of TV. More than one industry body pointed out the danger of what is essentially an unrepresentative, non-scientific self-selecting sample, the sort one is taught not to use in survey research courses.
The new policy entitled, The Way Forward, makes numerous generalizations about Canadian viewers and their tendencies without any actual reference to supporting research.
The most important assertion about viewing behaviour relates to "linear" or traditional TV viewing behaviour: "...shifting viewer behaviour, whereby viewers increasingly seek out and choose to consume programming on a program-by-program basis rather than through linear channels, will also have a significant impact on the funding model."
The Chairman of the CRTC, Jean Pierre Blais, told the Globe and Mail that it was a fait accompli: "...the environment, both the technological environment and how people have chosen to interact with it on the various platforms, has changed." He repeated this in a recent speech at the Banff World Media Festival.
The Commission did not examine Numeris ratings data to determine if the use of linear TV has changed significantly in recent years, especially the past year or two, even though it cites Numeris data several times in the policy.
Have viewers reduced their use of traditional TV, either by time shifting with PVRs or by use of video-on-demand or online streaming services?
Services such as Netflix and most online and on-demand services are not measured by ratings companies either in Canada or the United States but one can examine viewing levels of traditional TV to determine if there have been any substantial audience losses to those services.
TVB's weekly analysis of Numeris data reveals that viewing to traditional TV has declined very slightly, from about 27.7 hours per week per capita in 2009-10, i.e., the year prior to the introduction of Netflix, to about 26.7 hours per week today (52-week period ending June 7, 2015). Also noteworthy is that TVB's analysis shows that less than eight per cent of viewing today is time shifted using PVRs; and PVR use has not grown the past two years.
Viewing levels among younger adult viewers have shown somewhat greater losses but they are a small cohort, more likely to subscribe to services such as Netflix. Most other cohorts, the majority of the population, have seen their TV viewing habits little changed.
As for concerns that Canadians are abandoning BDUs, just released data from the CRTC show that while some legacy companies such as Rogers are losing subscribers, they are mostly being picked up by new entrants such as Telus and Bell Fibe.
The hand wringing about subscribers cutting their cable TV or never subscribing is overblown and in the end is no different than people cancelling their landline phone and relying on cell phones, which are mostly provided by exactly the same companies.
Overall, traditional "linear" TV has all but maintained its audience and it appears the threat from non-linear services is real but exaggerated. The impact of online TV viewing five years after the introduction of Netflix amounts to less than a four per cent loss in audiences to traditional TV in net terms. Why? It may be that viewers are continuing to use traditional TV and simply adding nonlinear viewing to their total viewing time, although online services have smaller audiences than many believe.
YouTube boasts that one billion people spend six billion hours monthly watching YouTube videos. Putting aside the fact that these numbers are generated by YouTube's server software, which tends to exaggerate usage and measures computers not people, are they really that extraordinary?
No. According to Numeris, Canadians alone spend about four billion hours watching traditional TV per month (26.7 weekly hrs x 4 weeks x 35 million population). Americans, according to Nielsen, spend almost 40 billion hours and worldwide, according to Eurodata/ITU, time spent watching traditional TV easily surpasses 500 billion hours per month. YouTube, which has been around for almost a decade, is rounding error in the ratings.
Pundits tend to ignore this, preferring to talk about impending change and the death of traditional TV. Incidentally, comScore, an independent measurement service, puts YouTube's worldwide usage at less than three billion hours per month (September, 2014).
Third-party research estimates that in 2014 Netflix's worldwide audience was even smaller, about one billion hours per month, three billion if you accept Netflix server data. The reported 3.1 million Canadian households who subscribed to Netflix at the end of 2014 are not stealing away much, if any, of the audience to traditional TV.
The Commission has seemingly overestimated the impact of new media services such as Netflix and YouTube and, incidentally, underestimated the amount of funding required to compete on the world stage. Only a small share of the $4.1 billion spent on Canadian programming identified by the CRTC policy is spent on drama/comedy and it is a tiny fraction of the program funding in other countries, especially the U.S. Has the policy set a goal that can never be realized with existing funding? The CRTC needs to revisit the question of what Canadians want from Canadian TV and how much they are prepared to spend to get it.
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